Many non-homeowners would like to be able to own their home. The 2017 survey reports that 44% households living in social rented housing, and 74% of households in privately rented housing would most like to live in an owner occupier property.

The fall in owner occupation has been particularly marked for younger households. In 1999, around half of householders aged 16-34 were owner-occupiers, compared to just over a third in 2017. Private renting is now the most common tenure for this age group.

First time buyers were particularly affected by the global financial crisis as lenders tightened their lending criteria and removed many high loan-to-value products from the market.

Although young householders now tend to rent, low interest rates and an increasing number of mortgage products have recently helped to increase the number of first time buyers. In 2017, there were over 35,000 loans to first time buyers in Scotland, the highest level in a decade.

First time buyers play an important role in the housing market. For example, a report prepared for UK Finance suggests that first time buyers provide liquidity in the housing market, allowing people to trade up and facilitate labour mobility.

These schemes are funded through ‘Financial Transactions’ funding from the UK Government. This is money that can only be used for loans beyond the public sector. Also, importantly, the funds must ultimately be repaid to HM Treasury.

In 2018/19, at least £120m of equity support will be available through the Low Cost Initiative for First-Time Buyers (LIFT) and Help to Buy scheme.

The main scheme in the LIFT programme is the Open Market Shared Equity Scheme. This supports priority groups, such as disabled people and people living in social rented accommodation, to purchase a house on the open market.

The Help to Buy (Scotland) Affordable New Build Scheme & Smaller Developers Scheme also provides a shared equity contribution for the purchase of new build properties, from a participating developer.

The Help to Buy scheme plays an important role in lower value new build sales. Using Scottish Government and Registers of Scotland statistics, SPICe has estimated that in 2017/18, sales through Help to Buy in Scotland accounted for at least 30% of new build sales under £250k.

Comment about government schemes

It is not clear whether government schemes always achieve their goals. Some of the questions raised about government support for owner-occupation include:

whether government investment simply inflates the price of new build properties

whether schemes allow people to buy a home who otherwise wouldn’t have been able to or simply allow people to buy a property earlier.

Much of the comment in the media about Help to Buy relates to the situation in England. There, the UK Government has placed more emphasis on supporting home ownership compared to the Scottish Government, which has focussed more on supporting social rented housing.

There are also key differences between the Scottish and English Help to Buy schemes. For example, the Scottish Government has revised its scheme to focus more on the purchase of ‘affordable’ properties. In Scotland, the maximum purchase price is £200k compared to £600k in England.

Overall, there is little recent specific Scottish evidence about the impact of the government investment in these schemes. The Scottish Government is currently undertaking work to help decide the future shape of its housing investment programme post 2021. Consequently, it remains to be seen what role such schemes will have in the future.